Recent Court Ruling Is A Beacon Of Light In Foggy Legislation On Lawyers Fees
When a lawyers fees are unpaid, or a client refuses to pay the account or disputes the fees owing, there are usually two potential avenues of recourse for either the client or the lawyer. Any party can either move to have the lawyers fees “assessed” by a court official called an Assessment Officer, or to pursue a lawsuit regarding the lawyers fees.
There has been much confusion even among the courts about what the proper course of action is in such a situation. The confusion lies in the archaic provisions of the Solicitor’s Act, an Act which has frustrated judges and lawyers alike when it comes to the interpretation of its provisions and how they apply to govern lawyer-client relationships.
We wrote an earlier blog about the confusion that the Solicitor’s Act has caused, and the recent media attention it has garnered when it comes to Contingency Fee Retainer Agreements commonly used in personal injury cases. However those types of retainers and the Solicitor’s Act provisions which govern it are but one example of the confusion that has been caused by the Act.
One need only review the case law on whether a lawyer can sue for his bill to appreciate the difficulty the Act presents in its current form. For decades lawyers have faced a potential outright dismissal of any effort to sue for their fees because of the wording of section 23 of the Solicitors Act which appears to preclude a lawsuit to collect fees from a retainer agreement. Yet there are other provisions in the very same Act which seem to allow it, such as section 2 which permits a lawsuit one month after an account is rendered.
Often times neither party would raise the confusing provisions of the Solicitor’s Act and a judgment would be rendered in a lawsuit. However the potential consequences could include an outright dismissal of the case with risk of costs payable now by the lawyer trying to collect on an account rendered. Although some lawyers would turn to the assessment process as a more certain way to avoid a dismissal of the case, because of the statutory provisions of the Solicitors Act, this process too came with serious problems. Assessment offices are very poorly staffed. In fact, as the Divisional Court noted in the 2017 case of Gilbert’s LLP v. David Dixon Inc. (Gilbert), the City of Toronto had only two assessment officers to deal with solicitor’s matters for the entire City. An assessment hearing once requested can take up to three years to finally be heard.
The two options would leave any lawyer between a rock and a hard place and was enough to very often discourage lawyers from pursuing non-paying clients for outstanding lawyers fees. Some clarity, however, was provided in April of 2017 with the Divisional Court ruling on Gilbert. The Court decided to take a stand on the problem, even though by the time the matter reached appeal stage, the client had paid the outstanding fees being sought in the case by the lawyer. The court acknowledged the importance of offering clarity on the issue to the profession generally.
The Honourable Justice Nordheimer for the Divisional Court observed from the outset that the Solicitor’s Act was plagued with confusing and problematic language, mandating outdated and impractical processes, compounded by the Ministry of the Attorney General failing to properly resource assessment offices.
The Court in Gilbert held that a simple or usual written fee agreement will not require prior approval by an assessment officer – contrary to the provisions of the Solicitor Act, which would otherwise render the practical application of the Act an absurdity. The written retainer is not subject to the prohibition against an action being commenced to enforce it even though pre-approval had not been obtained. A lawyer can seek an assessment or they can commence an action to recover the lawyers fees. An agreement that is simply indicated by a lawyer’s confirming letter will likely be sufficient to allow the matter to be dealt with as a court action. However, any disputes related to contingency fee retainer agreements remain outside the jurisdiction of the small claims court in accordance with an earlier decision by Justice Nordheimer in Jane Conte Professional Corporation v. Josephine Smith.
To add to the confusion. The jurisdiction of an Assessment officer to assess lawyers fees is narrowly circumscribed to situations where the retainer itself is not in dispute and where there exist no special circumstances which would oust the jurisdiction of the Assessment Officer. It will not be enough for a client to assert that the retainer is in dispute to circumvent an assessment process, the dispute must be a real dispute as to it’s terms or existence.
So while Justice Nordheimer can be credited for clearing the murky waters for clients and solicitors alike who are faced with a dispute over fees due, the Solicitor’s Act will continue to create a confusing situation for the profession and those who seek to access legal services. There remains a complicated hierarchy of jurisdiction and authority between various courts and the assessment office over disputed retainer arrangements, and with the recent call for unbundling of services in the interest of promoting access to justice, retainer arrangements are bound to become more complex. Hopefully the Ontario government will recognize the role the Solicitor’s Act is supposed to play in ensuring straightforward access to legal services and heed the calls of Justice Nordheimer to bring the Act into the 21st Century for the benefit of legal services consumers.